Prairie farmland market still strong, but slowing down

CNS Canada — Farmland values in Western Canada remain strong, but aggressive activity in recent years is showing signs of slowing down as difficulty moving grain this winter takes its toll on prospective buyers.

“There are still definitely buyers, especially for the better quality properties, but maybe the enthusiasm has been dampened somewhat,” said Grant Tweed, of Century 21 West-Man Realty at Brandon, Man.

After a number of years of rising prices and rising demand, some properties may be sitting a little longer, he said.

From a pricing standpoint, Tweed said a comparable piece of land was generally averaging out to the same price as a year ago, with the odd piece going for a premium, but no land declining in value.

“It appears that the market is levelling itself out,” added Bob Lane of Lane Realty in Regina. Land prices were still strong, he said, but he agreed with Tweed that it was not moving as fast as in recent years.

Logistics issues that hampered movement of the record-large crops grown in 2013 meant some farmers were successful in selling their crops and others weren’t, said Lane. He pointed to those cash flow issues as one factor limiting some of the interest in buying land.

“What we’ve learned from this winter is that ‘You’re not always guaranteed that the money will be there when you need it,'” said Tweed.

The sobering situation was likely good for the industry in the long-term, he said. “I don’t think we’ll see a big drop,” he said, although there may be a period where the land doesn’t move as quickly.

Tweed added that investment buyers may see a slower rate of return, which could take some of that activity out of the market.

However, farm prices in southern Ontario and other areas have climbed at an even faster rate than seen in the Prairies in recent years, and he said the scarcity of land there should keep western Canadian land attractive to people looking to relocate.

While cropland values may be showing signs of levelling off for the time being, Tweed was noticing an increased demand for grassland from the cattle sector.

Pasture land was in shorter supply, he said, as more of that land has been diverted to annual crops in recent years.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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